Markets:

• WTI crude oil up $3.74 to $5.6%
• US 10-year yields up 1.7 bps to 3.98%
• Gold up $80 to $5355
• S&P 500 futures down 0.7%
• USD leads, GBP lags

The whole market was holding its breath as oil futures opened to start the week and the initial price action was explosive with WTI hitting $75.33 and brent rising to $82.37. Those levels didn’t last though as both stayed at the peaks for mere seconds and are now trading $5 from the peaks. Both are still around 5.5% higher though in a significant move that will be closely watched all day.

A hint that the opening moves wouldn’t be too crazy came from FX, where the US dollar saw only modest strength. AUD/SUD was particuarly interesting as it gapped down 80 pips at the open but slowly fought back and is now basically flat. That’s been the shape of all price action in risk trades.

Fixed income is another example as yields initially fell on the flight to safety trade but we now see them 2-3 bps higher across the curve, perhaps more worried about oil than war.

A big part of the early reversals is no doubt profit taking as there was plenty of talk and positioning on a war ahead of time. I think that theme will play out throughout the day but eyes are also on how Iran responds